UPDATE 3-Economic fears yank Toronto stocks sharply down

TORONTO Jan 17 (Reuters) - The Toronto Stock Exchange's
main index dove on Thursday, as fears of the possibility of a
recession in the U.S. prompted a slump in resources and
financials, leading to a third straight day of hefty losses.

The S&P/TSX composite index .GSPTSE closed down 279.22
points, or 2.14 percent, at 12,795.64, its worst close since
early March. All of the TSX's 10 main groups were lower.

The index has racked up losses of more than 900 points
since Tuesday, erasing all of 2007's gains.

The energy and materials sectors were the biggest drag on
the index on Thursday, stung by weaker commodity prices and
jitters over the impact a global slowdown could have on the
demand for resources.

Potash Corp of Saskatchewan POT.TO was the largest net
decliner after an analyst questioned a build-up in North
American potash inventory in December. The world's largest
fertilizer producer skidded C$13.90, or 10.1 percent, to
C$124.00. The materials sector was down 4 percent.

In the oil patch, Suncor Energy SU.TO lost C$4.20, or 4.4
percent, to C$91.81 and Canadian Natural Resources CNQ.TO
fell C$3.40, or 5 percent, to C$64.98, as crude slid toward $90
a barrel. The energy sector trimmed 2.8 percent.

The beaten-up financials group, the largest sector on the
index, dropped 1.3 percent while south of the border, Merrill
Lynch & Co Inc MER.N, the world's largest brokerage, reported
about $16 billion in mortgage-related writedowns and
adjustments.

In Toronto, Royal Bank of Canada RY.TO was off 54
Canadian cents, or 1.1 percent, to C$48.11 and Toronto-Dominion
Bank TD.TO lost C$1.25, or 1.9 percent, to C$65.25.
Continued...